I wish to bring before the House the question of bankruptcy and the contributors' stamp payments under national health insurance. A week last Thursday I put a question to the Minister asking whether, in the case of an employer who had deducted from the wages of an employe the money necessary to meet the payments of the em-ploye under national health insurance, and who afterwards went bankrupt, his Department through the scheme, could make up the deficiency instead of debiting the individual concerned with arrears of payment under the Act. The Minister replied that this question had been before the Commissioners on many occasions since national health insurance was instituted, and every time it had been turned down because, he suggested, it might act as an incentive to an insured person not to see that his card was duly stamped at the proper time. The inference was that if it were known that in the case of a bankruptcy the deficiency of the individual whose card had not been stamped would be made good, it might lead to collusion between the employer who was going to become bankrupt and an employé. With a good deal of experience on the practical side of the matter, I cannot regard that as a reasonable argument. I realise that I shall be told that this is but a small problem, affecting only very few people, but I suggest that an injustice is no less real because it affects only a few, and I am certain that when the House is aware of what happens in these cases it will call upon the Minister to remedy the grievance. Whether this injustice is remedied by the method I suggested or whether the Minister should examine each particular case as it comes before him and use his judgment is a matter for the Minister to decide.
In reply to the question I put in the House the Minister was good enough to send me a three- or four-page explanation of the attitude he had taken up. The first suggestion he made was that the Royal Commission in 1926 were unable to recommend the adoption of this proposal. They reported that they doubted whether the course suggested would be desirable, as it might encourage laxity in the payment of contributions at the proper time, and might prove embarrassing as a precedent if cited in support of a similar payment in cases not involving bankruptcy, for example, where an employer had disappeared. The Minister added that the Minority Report did not contain any expression of dissent from this conclusion. I am not surprised at that, because, as he has suggested, it is a small problem and the Commission were probably dealing with matters which they regarded as of greater importance. Why in the world an argument of that sort should have been used by the Commissioners I cannot understand. The situation could not arise where the employer had disappeared, because in that case his assets would remain and would be chargeable in respect of the stamps. A bankruptcy leads to injustice because, although the Ministry are preferential creditors, the Official Receiver does not get sufficient money to meet the full cost of the stamps.
The Minister, in his explanation to me, shows why, in my judgmenet, this change should take place. He says that so well does the system work at present that 99½ per cent. of the total amount due as contributions is regularly paid. That is a wonderful tribute to the insurance scheme, but it does not excuse the existence of this loophole under which injustice is done. Out of a total of something like £50,000,000 which is involved only £5,600 was claimed in bankruptcy proceedings during the last 12 months, and the amount recovered by the Department was £3,250, leaving a deficiency of only £2,500. What does that mean? It means that that is the price of remedying this injustice; and seeing that the Central Fund is putting to reserve something in the neighbourhood of £1,000,000 a year, a sum of £2,500 ought not to stand between the Minister and the remedying of this injustice.
The Minister has suggested that there is some responsibility on the part of the employé to see that his card has been properly stamped. That proves that the Minister does not know the commercial practice in these matters. It is not the custom, in large undertakings, at any rate, for an individual's card to be available for him to examine it week by week. I am sure that nine-tenths of the employers whom I know would object very seriously if week by week any of their employés went to the office and asked to see whether their cards had been stamped. The cards are taken into the office and are not seen again by the employés until the end of the period for which they have to be stamped.
The case which led me to put down my question arose out of a bankruptcy in connection with a mill in the constituency of my hon. Friend the Member for Nelson and Colne (Mr. Silverman). There were in that mill 13 individuals whose cards had not been stamped, although the money had been deducted from their wages week by week, and as all the cases came within the one half-year there was 'no possibility of there having been carelessness on the part of those concerned. They were all following the routine adopted by every cotton employer and employé in Lancashire. In some instances the loss does not amount to much. If only two weeks have been worked by an individual and the value of one stamp is recovered the man is only one stamp in arrear, and as an individual is allowed two stamps in the year it may lead to no trouble if only one stamp is missing.
On the other hand, there may be a case where 25 stamps are missing and the cost of only 15 stamps can be recovered out of the proceeds of the bankruptcy. That will mean that the individual is 10 stamps in arrear. He then has either to make up those arrears or to suffer a reduction in the payments he receives for sickness benefit of double the amount per week of the value of the stamp. In such a case it would mean an individual paying arrears of 16s. 8d., and there would be the unfairness that he was expected to pay his unemployment health insurance contribution no less than three times. His 10d. a week is deducted from his wages and put with the 10d. contributed by the employer to makes 1s. 8d. When the 1s. 8d. stamp has not been put on the card arrears have to be paid at the full amount. When the man is called upon to pay arrears he has to pay 10 sums of 1s. 8d. That means that, with the 10d. he has already paid, he is paying 10 half-crowns because his employer has turned out to be, in common parlance, a thief.
I do not want to pay a compliment to the Minister of Labour—I do not say that he is not deserving of it, but I do not want to hold his Department up as a paragon of virtue. In their administration, the Ministry of Labour are no doubt ahead of the Ministry of Health. I have had cases where bankruptcies had occurred and where the same argument was used, that at the end of the 12 months no stamps had been put on the cards. That meant that the men ought not to have been entitled to unemployment benefit because of the shortage of stamps. In three such cases the Minister of Labour has, to my knowledge and taking all the circumstances into consideration, decided, in the interests of the men, that the stamps ought to be credited to them, because they had paid for them, although their employers had failed to put the stamps upon the cards.
I suggest to the Minister of Health that even if he decides against doing away with the circular which provides for this kind of thing because it means getting a fresh lot printed, he should ask for sufficient power to remedy an injustice, even though he does not want to do it in the way I suggested in my question. When he places upon the individual concerned responsibility for seeing that the stamps are on their cards I suggest that what I put forward and he somewhat resented, namely, that the inspectors of his own Department are those who are responsible, is, in law, the actual position. The only person who can summon employers for the recovery of the stamps is the Minister. They have sinned against his administration of the law and he can and sometimes does take them into court for refusing to do it. The inspector is the only individual outside the employe who is able to call upon the employer and ask whether the cards have been stamped. It is on him that the responsibility rests for seeing that those orders have been carried out.
The Minister can remedy this in the manner that has been suggested previously, even though the Royal Commission turned it down. The Royal Commission, which sat in 1924, could not know as much about this question as the Minister of Health knows in 1939, because since then there has been 15 years' experience. If, during the last week, only £2,500 arrears was claimed, that is all the more reason why the right hon. Gentleman should remedy the matter to-night. The circular to which I referred, which the Minister sends out, is in this instance as follows:
Madam, I have to inform you that health and pensions insurance contributions to the value of 1s. 2d. in respect of the period…have now been recovered out of the estate in bankruptcy of your late employer, Mr. H. Chadwick. No further assets are available for the repayment of arrears of contributions and no further action can be taken in the matter by this Department. The contributions are being advised to your Approved Society, in order that they may be credited to you.
What follows after that is that the individual receives notice, in spite of the fact that he has been working and has imagined that he was paid up, that there were so many stamps in arrear. Any failure to pay the penalty means being subject to the disability which applies to an individual who has not contributed at all. It is a great injustice, and greater because of the few people whom it occasionally affects.
I should like to support the plea which my hon. Friend the Member for Farnworth (Mr. Tomlinson) makes, especially since, I think, the great majority of the cases during the past year in this unfortunate situation have arisen in my own constituency. I do not think it necessary to add a word to the extremely lucid picture which my hon. Friend has given of the manifest and obvious injustices of a situation in which an employé in a hard-hit and poorly paid industry may be called upon to pay his contributions three times over before becoming entitled to benefit from them.
I would refer to the suggestion which, I understand, the Minister has made as to the reasons why he could not come to the assistance of the people in the handful of cases which have been so unfairly treated. I understand the principal reason is that it might make an employé laxer than he ought to be in seeing that the money he pays is properly applied. As I understand the scheme, it was precisely because the Ministry of Labour realised how difficult it was for the employé to do that, that the onus was placed upon the employer to see that the stamps were affixed. The employer is in control of the money and of the cards. He is always there and his books can be inspected, whereas the employé is not in so advantageous a position for seeing that the stamp is affixed or being able to supervise in order to see that it is affixed. It is said to be the duty of the individual employé to go week by week to the office and say: "Please can I see my card? I know that I have paid my money. I do not believe that you have put the stamps on the card unless I see them." How can an employé be expected to do that?
I would relate an experience which I had in Liverpool this month. This instance does not concern so much national health insurance contributions as unemployment, but the principle is the same. A man was employed in a big building concern in Liverpool. He was engaged upon building air-raid shelters. The firm had not a regular office on the site where the work was being done, so the man gave his cards to the foreman, who put them in his pocket, intending, when a reasonable opportunity occurred, to hand them into the office in the proper way. At the end of 10 weeks, the employers had no further use for the man's services and then, for the first time, he was told that his cards were lost. They paid him his week's wages and gave him his 10 weeks' stamps to put in his waistcoat pocket. That was entirely improper, but when I called attention to it I was told: "Mr. Silverman, you must remember that this is a very good firm of standing, which does not do improper things. We recognise that this was not quite right but, unfortunately, the circumstances were exceptional and difficult, and we do not think we ought to take any action about it." The man was provided with a temporary card so that he could put his stamps upon it. I am not making any criticism about that.
The reason I cited that instance was to illustrate my point of how difficult it is for the employé to keep check of a situation of that kind. But it does not quite stop there. I was glad that my hon. Friend mentioned the question of the inspectors of the right hon. Gentleman's Department. I did not know that this question would be raised this evening; I do not complain of that, but it is a fact that I did not know, and had I known I might have had with me certain notes, papers and reports which I have in my possession. Therefore, I cannot cite an authority for what I am saying, but I believe it to be true that in the particular case which my hon. Friend had in mind there was a period before the bankruptcy occurred in which it was obvious to everybody and it was known to the inspector that the firm was in a financially weak position. Of course, when people go bankrupt they do not do so suddenly; it is the end of a long struggle and there are periods before the bankruptcy occurs when the financial position is weak.
Not only did that man's inspector know of that, but he himself knew that the stamps were substantially in arrear, although the employés had paid their money, and when he was pressed to take some action about it he said, "Well, of course, under the rules and according to the system to control which I am appointed an inspector, that is what I ought to do. I ought to take this man into the police court here and now and charge him with the offences which he has committed under the Act, but if I do that I will merely push this man over the verge of bankruptcy and all these workpeople will lose their livelihood. Do you want me to do that?" Does the right hon. Gentleman see the importance of that factor, especially its bearing upon his argument about the duty of the employé? The employé is in a cleft stick when he knows that the stamps have not been paid, if he is a worker in an industry which is as hard hit as this industry has been for many years. If he goes to his employer and says, "Make up my stamps completely and make them up now," and the employer replies, "If you force me to do that you will drive me out of business," and when the right hon. Gentleman's inspector takes exactly the same line and refuses to exercise the power that he has because if he does exercise it the employer may be driven into bankruptcy and the man's employment may be lost, the right hon. Gentleman is really not entitled to argue that there is some obligation on the employé to do what his own inspector for that good, bad or indifferent reason expressly refuses to do.
Although the matter is one of the very greatest importance to the individual workpeople concerned, from the right hon. Gentleman's point of view it is a very small matter indeed. I agree with my hon. Friend that if you have 99½ per cent. right, the fact that it is only ½per cent. that is wrong increases and does not diminish the injustice to those who are left out of the scheme in this way. It makes it worse and not better to say, "Oh, well, it is only a few of them." I would say to the right hon. Gentleman that when, from his point of view, the matter is in so small a compass and when the figures are such that they would hardly be noticed at all in his annual balance sheet, he really might make an effort to see whether within the powers that he now has, this trifling sum might not be paid in order to ensure that those workpeople who have paid what they were required to pay under the law get what they have been paying for. I suggest that he has the power now. I think he will agree that he would be acting quite within the powers vested in him if before transferring any surplus at the end of the year—whatever it is that goes into the reserve funds—he were to say, "There is an odd couple of thousand pounds, and I am entitled to use that money to remedy this lack of accommodation in the working of the scheme, this gap which produces an injustice." Perhaps he might use these powers, and see that this very great injustice to a small number of decent and hard-working people is now removed.
I am indebted to the hon. Member for Farnworth (Mr. Tomlinson) for giving me notice that he intended to raise this matter this evening; and I am indebted to him also for having read to the House the letter which I sent him in order to set out as far as possible the arguments on the matter, so that we might be at one on the exact points of difference. I must admit that he put the points in a lucid, and indeed a convincing, manner. I do not quite agree with him, however, when he says that perhaps the Royal Commission did not go into the matter, because it was so small a matter. After all, that is what Royal Commissions are for. This Royal Commission went into the matter, and reported adversely on the contention which the hon. Member brings forward. It was a Commission which had far greater knowledge than any that I can pretend to of the circumstances of the case. Nor was it a new problem on which we have had a great deal more experience since then; because the matter has been, as the hon. Member knows, under consideration off and on since 1912. In 1924 there was considerable experience—
That is so. I am going to comment on that in a moment. The hon. Member for Farnworth suggested that there was a way of individual discretion on the part of the Minister, somewhat similar to the discretion exercsed by the Minister of Labour. A bouquet was thrown to the Minister of Labour, which I shall certainly convey to him, these things being all too rare—and perhaps I should regard it for that reason as being all the more a triumph for the Minister of Labour. But the circumstances are not exactly the same. There are central funds at the disposal of the Minister of Labour which are much greater than those at the disposal of the Minister of Health, and his power of regulation is more comprehensive than mine. In fact, it is possible that such a step might require legislation before it is decided upon. I did not raise thas aspect of the matter, because it cannot be discussed by us here to-night on the Adjournment.
As the hon. Member for Nelson and Colne (Mr. Silverman) developed his argument, I began to think that perhaps there was more to be said for the view of the Royal Commission than I had grasped at first. The argument that he advanced, to the effect that an inspector or contributor might hesitate before asking for stamps to be placed on a card because it might push some struggling firm over the frontier into bankruptcy, was a dangerous argument, which might lead to those methods of collusion to which I referred.
My information is just precisely that which occurred in the particular case to which my hon. Friend referred so that the Ministry was in that sense a party to the position which now exists.
What the hon. Gentleman did rule out was that in certain cases the employé might hesitate before pressing that the law should be put into operation for fear that it would in fact cause the firm to pass from solvency to bankruptcy, which is the collusion to which I referred when writing to the hon. Member. I think the case is perfectly clear.
The fact that two people might be a party to collusion does not make it half as bad, but twice as bad. The danger of collusion is clearly one which could not entirely be ruled out on evidence submitted by the hon. Gentleman the Member for Nelson and Colne himself. I have no desire to stand on technicalities here. There is a case such as that which the hon. Member for Farnworth has brought up, and which, in reply to a question in the House, I indicated I would keep closely in mind, and undertook in my letter to him to review the matter, and I am reviewing the matter now. It is true that the sum is not in itself a large one, and if the matter can be solved without causing an injustice greater than that which we seek to avoid, I shall be very glad to have this injustice removed, for many of us feel that injustice arises when a person who has, in good faith, paid for benefits finds himself deprived of those benefits through no fault of his own. It arises not only in cases of National Health Insurance benefit, but in other benefits paid for in the same way, and it would be impossible to examine one of these benefits entirely separate from the others. I do not myself intend to ride off on the fact that it was recommended against by the Royal Commission a long time ago, or on the ground that it might possibly require legislation. If it were found impossible to deal with it by regulation, I should not hesitate to inquire of those who are expert in such matters with the object of attempting to frame some non-controversial and short Measure which would put this matter right.
I have not yet completed my examination of the matter. It will be conducted in a most sympathetic spirit to see whether this can possibly be remedied. If I arrive at the conclusion that it can be remedied, I shall have no hesitation in coming forward either with a regulation, or, if necessary, a request, to the House that it should endow me with powers to deal with the matter and see whether we cannot remove a difficulty, which, though small in itself, might cause a great many hardships to a certain number of persons.